Bank al-Maghrib (Morocco) Holds Rate at 3.25%

The Bank al-Maghrib of Morocco held its main policy rate unchanged at 3.25%.  The Bank said: "Nationally, despite the slowdown in the global economic activity, domestic demand continued to hold up well.... In this context where the central inflation forecast is permanently consistent with the price stability objective and the balance of risks is tilted to the downside, the Board decided to keep the key rate unchanged at 3.25 percent."  The Bank also said: "In view of the sustained liquidity shortage on the money market and considering the outlook for liquidity factors, Bank Al-Maghrib will carry out longer term repo transactions, as part of its operations to regulate the money market."

Previously the Bank also held interest rates unchanged in June this year; it last changed its interest rate in March 2009 when it reduced the rate 25bps to 3.25%.  The Bank said in its statement that it is forecasting inflation of 1.3% in 2011 (previous forecast 1.4%), and that it expects bank lending to grow by 8% for 2011 (compared to 6.8% growth in April), and total GDP growth is forecast at 4.5-5.5% this year.  Morocco reported annual inflation of 2.2% in August, compared to 1.8% in July and 0.7% in June.  The Moroccan Dirham (MAD) has gained around 2% against the US dollar this year, while the USDMAD exchange rate last traded around 8.22

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